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Oil Market Snapshot – August 2021

  • Brent is back trading at c. $70/bbl after a weeklong collapse to the mid-60 level on weaker demand data and rising COVID infections in the US and China
  • We increase our Brent annual average forecast marginally to $68.67/bbl in 2021 (+$0.39/bbl on previous), due to a sustained spell above $70/bbl in recent months
  • We see prices rising in 2022 due to continued OPEC+ market management
  • Our 2021 demand growth forecast eases to 5.39 million b/d (-30,000 b/d on previous), due to COVID concerns and slower growth
  • We increase our 2021 supply growth forecast to 1.75 million b/d (+130,000 b/d on previous) on a brighter outlook for US LTO, though production will still decline there on average
  • A recovery in LTO production has started a little earlier in the year than expected, so firm growth in 2022 is now even more likely
  • The rig market has seen demand increase, but operators are still in the driving seat, locking in low rates with long contracts
  • We see the market in deficit by 1.74 million b/d in 2021, with supply growth undoing not even one third of the decline in 2020
  • For 2022, a surplus of 1.34 ...

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by Graham Walker // 26 August, 2021

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